Customer loyalty programs need regular check-ups the same way an exotic sports car does, both are temperamental and both quietly stop running well long before they fail spectacularly. Here are five quick checks to run on your loyalty program now, from "is it still mechanically sound" to the one that matters most: is it still fun to be in?
Loyalty programs are the price you pay for rich customer data, you make money from the careful use of that data. That insight, and the 2002 Reinartz/Kumar Harvard Business Review research that backs it, changes how you decide which customers earn loyalty investment and which don't. Here's the practical structure that follows from it.
Other marketing programs prove causality with control groups — set aside a chunk of customers, expose them to everything except the campaign, measure the gap. With loyalty programs, that's awkward to impossible: how do you exclude your high-value customers from the loyalty program? Here's the case for measuring loyalty program effectiveness despite the control-group problem, and the approaches that work.
Refer-a-friend programs are everywhere, and the recent Schmitt-Skiera-Van den Boulte paper finally puts hard numbers behind whether they actually pay. The answer is yes: customers from paid referral programs retain longer and contribute more margin than non-referred customers. Here's the data, and what it means for how much to spend on stimulated word-of-mouth.
Australian general insurance is a brutal price war with new overseas online entrants undercutting on premium. The Buzz Insurance, IAG-backed, went the other way: co-created their loyalty program with thousands of customers via focus groups, market research and the My Insurance Ideas community. Here's what they built, and why customers responded to a loyalty program that wasn't dressed up as a discount.
Should customer loyalty management be a separate team or distributed across the business? Plenty of organisations get stuck on the question, and stuck means nothing changes. Here's a best-practice structure that works in real organisations, starting with C-level commitment and ending with operations owning operations, not loyalty owning operations.